Red Hat increases stock-ownership rules for executives

Raleigh software company Red Hat will soon require its top executives to own more of its shares, creating added financial incentive for them to help the stock rise.

Since 2006, the company has required officers and directors to own shares. The revised stock-ownership policy, which takes effect March 1, increases the minimum ownership levels, said Brandon Asbill, vice president and assistant general counsel.

For example, an executive vice president will have to own and retain at least 33,000 shares, while an outside director will have to hold 10,000 shares, Red Hat reported in a Securities and Exchange Commission filing.

"Stock ownership guidelines can be a compelling way to ensure that the interests of executives and directors are more strongly aligned with the interests of stockholders," Asbill said in a prepared statement.

Still, most top executives and directors already own much more than the minimum levels, according to SEC filings. CEO James Whitehurst, for example, will be required to own 33,000 shares. He now holds more than 300,000, according to SEC filings.

The guidelines say that stock owned by the executive or an immediate family member count toward the total.

Also, executives can request an exception from Red Hat's compensation committee for "special circumstances" such as financial hardship, educational expenses and estate planning.

Red Hat's stock has nearly tripled in the past year, making it one of the best-performing publicly traded companies based in the Triangle. On Wednesday, the stock rose 12 cents to $27.62.